Execution Forges Rescue Efforts
As in every rescue operation, the success of the national effort to modify about 4 million loans and counting depends on execution more than on systems and tools. Hence, the industry focus is on efficiency of expertise, processes, regulation and technology.
Servicers deal with higher costs and changing deadlines as they strive for efficiency within and outside of the Home Affordable Modification Program. It is an uphill battle against perishing home equity and unemployment. Workouts resemble undercurrents in a large deep sea since the multitude of mortgage servicing processes simultaneously occurring in the market in a nontraditional order have turned payment collections the least of a servicer's worries.
Key to loan mods is forging a tradition where data are scrutinized to the origin, risk is measured upfront, borrowers are reckoned with face-to-face, and nonprofits are a welcomed assistance. Investors hold another key: liquidity. Still coming from limited, mostly government sources, it is another challenge on top of capacity challenges and rising inventory management costs.
The crisis is motivating banks to improve efficiency during another challenging year.